Chapter 5 Notes - Chapter 5 Notes Short-term Investments or...

Chapter 5 Notes •Short-term Investments, or marketable securities, are stock or debt investments that a company plans to hold for one year or less •Called a gain(not revenue) if increase of asset worth, because it is not a core business activity •You need to make a journal entry even when you do not sell your investment, if you keep your investment until after the end of the period, you need to make an adjusting entryon the last say of the period •In the adjusting entry, you mark your short-term investments (up or down) to their market value on this day •Unrealizedincrease/decrease in stock market price, still own •Unrealized gain increases retained earnings. •Loss is debited on expense that snows on the income statement •Note: We keep a separate account for each security we carry, example: Marketable Securities- Google, and MS- Ford •Gain/Loss form Sale of Investment are the two accounts to record the realized loss or gain through stock sales •

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